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CEOs More Confident, But…

US CEOs' confidence in business has rebounded to pre-2007 levels, according to PricewaterhouseCooper's “Annual Global CEO Survey,” and has moved back in-line with CEOs around the globe.

Almost three-fifths (56 percent) of US CEOs are very confident about business prospects over the next three years. However, their optimism is tempered by a greater focus on managing risk and competitive threats.

According to the report:

    In fact, more US CEOs (86 percent) say they are changing their strategies to allocate more senior management attention to risk management than global CEOs (72 percent) and adjusting performance incentives to account for risk (54 percent in US vs. 36 percent globally). Further, more US CEOs say they are incorporating risk scenarios into strategic planning (82 percent vs. 67 percent) and allocating more board meeting attention to risk management (68 percent vs. 58 percent).

US CEOs who indicate they are “very confident” over the next 12 months rose 10 percentage points from 2007 (35 percent) to 2010 (45 percent), after an extreme dip to 15 percent in 2008, coming closer to 2006 levels, when 53 percent of US CEOs were very confident in their outlook for revenue growth.

PwC's survey found that US CEOs are expecting to expand their operations internationally, particularly in Asia and Latin America. But growth may not come exclusively from emerging markets. Sourcing within the US seems to be a significant driver of opportunity, as CEOs outside the US see the US as both a market opportunity and a sourcing solution.

In fact, the US is second only to China — and ahead of India and Brazil — as the country most important to CEOs' sourcing needs. Business executives cite the higher quality of products and services that US companies can produce, but also list a number of other advantages: financially stable, cost-competitive suppliers; companies with decades of proven experience serving international markets; the US's extremely low overall risk profile; and business partners capable of innovating products on the fly. These attributes were also cited in President Barack Obama's State of the Union speech Tuesday night.

Leading firms in other countries are also looking to the US for market potential, PwC finds. Once again, after China, the US was the country most often named by non-US based CEOs as important to growth prospects over the next three years — ahead of Brazil, India, and Germany. US CEOs recognize these opportunities, as 68 percent say they plan to increase their commitment to generating innovations and safeguarding intellectual property over the next three years.

“Emerging-market-headquartered companies are enhancing their global networks of suppliers and partners,” said Bob Moritz, chairman and senior partner, PwC US, in a press release. “There is a tremendous potential here to create new opportunities, including jobs, to revitalize the US economy. A renewed focus on quality, innovation and talent pools — where we appear to have a competitive advantage — will further establish the US as an attractive sourcing location for these companies.”

More than half of the global and US CEOs surveyed by PwC plan to increase employee headcount during the next year. Additional analysis and the entire PwC report can be found at: Annual Global CEO Survey.

10 comments on “CEOs More Confident, But…

  1. eemom
    January 26, 2011

    Barbara, thanks for the post.  I have to say that is one of the more encouraging articles I have read recently.  The key factor for me was that CEOs plan to increase headcount and drive innovation.  We as a country have to stop being scared of what might happen or another recession is possible and start to invest in the future.  We have to start being optimistic as a group in order to ensure a brighter future.  Companies investing money in risk assessment is good as long as they invest more in growth, innovation and job creation.  The very survival of the US economy depends on it.

     

     

  2. Jay_Bond
    January 26, 2011

    This is very encouraging news for the U.S. This survey states that major companies around the world are looking at the U.S. workforce in a positive light. They look highly on what the U.S. has to offer. Even though some of these jobs may not be very high paying, they are jobs. This job growth will continue to help the American economy in many ways.

    With more people taking jobs and getting off unemployment, this helps the general population with many economic concerns. These global companies and their CEO's are now taking advantage of the vast skilled workforce and resources America has to offer. With the economy and job losses continuing through the last couple of years, CEO's are able to get a skilled workforce at a cheaper cost. This in turn helps to generate confidence among the U.S. consumers which will continue to spend their earnings and help spur the economy.

     

  3. Ms. Daisy
    January 26, 2011

    Barbara:

    Thanks for this uplifting article. Its exciting to see in the data shared that the US leads in risk management and consequently due dilligence with investments. This obviously says we have learnt from the precursors of the economic disaster of the last couple of years. More importantly this is also good news to hear that the higher quality products and services that the US is known for is finally being acknowledged and paid for.

    Immigrants have been drawn to the US for centuries beacuse of opportunities for self growth, freedom from persecution, financial opportunities, and the political stability of the nation. The overall low risk profile of private ventures will certainly draw new investments back to the US.

    The CEOs commitment to innovation and the safeguarding intellectual property is in line with President Barack Obama's call to out innovate, and out build the rest of the world.  Hopefully this helps to push back unemployment rate.

  4. Eldredge
    January 26, 2011

    The US has a lot to offer in quality and capability – thanks for providing the summary of this study.

  5. Barbara Jorgensen
    January 27, 2011

    The most positive part of this report for me was the view non-US CEOs have on the attributes of the US. This particular report came out the day after the State of the Union speech which was also very upbeat about American innovation. The last few years have been brutal for everyone from mimimum wage workers on up (with a few exceptions) and it's easy to get bogged down in how the US compares with China. If we can stop looking East and capitalize on our assets, there is a better future ahead.

  6. Himanshugupta
    January 28, 2011

    I agree with other readers that it is a good news for US economy as CEO are more confident in it and want to dive for innovation and growth. But its also very good report for non-US economies because the survey shows that the CEOs want to incorporate risk management as a part of the business strategy and allocate more resources to counter cometition treat from developing countries, which are real treat. In my opinion, more competition will bring more growth and innovation to the technology sector.

  7. maou_villaflores
    January 30, 2011

    “we can stop looking East and capitalize on our assets, there is a better future ahead”

    – but you cant ignore the East in particular China since this is one the leading economy now ..just a thought.

  8. Anna Young
    January 31, 2011

    This is good news for the US economy. The report reveals a change in attitude from risk avoidance to risk taking; it shows US CEOs are ready once more to believe in the US workforce and its innovative ideas. But what is even more encouraging as the report asserts is the recognition by non US CEOs of the importance of the US's attributes.

    However, whilst its time to appreciate and capitalise on assets, the east and other developing economies will always find ways to lure organisations.  

  9. seel225
    January 31, 2011

    Barbara, thanks for sharing about Annual Global CEO survey in a short article. The confident of the CEOs is a very good sign for US economy.The attention towards the cruial factors such as increase head count and risk mangement shows their interest  for building strong and secure economy for US. And also CEOs should have focus in increasing employement with minimum budgets. In coming years CEOs should have plans and business strategies to face the global markets.

     

  10. Barbara Jorgensen
    January 31, 2011
    • Good point Rich and something that should be considered. On the other hand, the US, Europe and Asia all export to one another, so optimism in any region stands to benefit the others. If the US is optimistic and this  fuels consumption of products, goods and services, thta's good news for Europe and Asia as well.

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